Evaluation of Financial and Innovative Potential of the Commercial Organization based on the Definition of Financial Innovation Sustainability

Viktoriya Valeryevna Manuylenko; Andrey Aleks; rovich Mishchenko; Olga Borisovna Bigday; Irina Sergeevna Mishchenko; Natalia Vladimirovna Sobchenko

Evaluation of Financial and Innovative Potential of the Commercial Organization based on the Definition of Financial Innovation Sustainability

VIKTORIYA VALERYEVNA MANUYLENKO
Institute of Economics and Management
Department of Finance and Credit, North Caucasian Federal University
1, Pushkin St., Stavropol, 355009, Russia
Tel: +7(8652)95-68-08
Email: vika-mv@mail.ru

ANDREY ALEKSANDROVICH MISHCHENKO
Institute of Economics and Management
Department of Economics and Finance, Stavropol University
8, Kulakov Av., Stavropol, 355029, Russia

OLGA BORISOVNA BIGDAY
Institute of Economics and Management
Department of Economics and Finance
Stavropol University, 8, Kulakov Av.
Stavropol, 355029, Russia

IRINA SERGEEVNA MISHCHENKO
Discipline-cyclic Department of Special Disciplines and Professional Modules
Moscow Banking School (College) of the Central Bank of the Russian Federation
23, Signal passage, Moscow, 127273, Russia

NATALIA VLADIMIROVNA SOBCHENKO
Accounting and Finance Department, Faculty of Financial Management and Banking
Stavropol State Agrarian University, 12, Zootehnichesky Lane
Stavropol, 355017, Russia

*Corresponding Author: VIKTORIYA VALERYEVNA MANUYLENKO, Institute of Economics and Management, Department of Finance and Credit, North Caucasian Federal University, 1, Pushkin St., Stavropol, 355009, Russia, Tel: +7(8652)43-84-15; Email: viktoriya.v.manuylenko@gmail.com

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Abstract

Theoretical and methodological researches show that there is no single opinion about approaches to estimating innovative capacity of economic entities. The work studies characteristics of innovative capacity within the resource-based approach. This approach reflects opportunities for innovation activity development, defines the strategy of innovational development, and combines innovation capacity with a specific level that identifies innovative capacity with scientific and technical, technological level. Through the theoretical and methodological standpoint it offers the approach to defining the essence of innovative capacity, generalizes classification of its types and kinds according to specific classification criteria, and systemizes the approaches to estimating innovative capacity. These are the following approaches: detailed approach, diagnostic approach, the approach based on estimating financial and innovational soundness of the organization and separate methods. In practice the innovative capacity of Russia was estimated by calculating the global index of innovations in comparison with other countries of the world according to the level of innovation opportunities and results. On the macro level the priority of the approach based on estimating financial and innovational soundness of the organization was rationalized. This approach is meant both for adequate estimation of its state and readiness for innovations implementation. As a result, key areas of using results of estimating innovative capacity on the macro, meso and micro levels were defined.

Keywords

Innovative Capacity; Innovations; Financial and Innovational Soundness; Global Index of Innovations

INTRODUCTION

Innovative capacity is a necessary condition for making innovational business. As practice shows, few national organizations have a strong innovative capacity and all the more can efficiently use it. The knowledge of innovative capacity and measures taken by the organization for its growth are key moments in understanding its future, the present state and the performance.

In order to define rational sizes of the innovative capacity of an economic entity, it is important to identify the notion “innovative capacity” and its content. In spite of the fact that problems related to forming and estimating the economic entities’ innovative capacity have a long period of development, up to now neither Russian nor international innovative theory has developed a unified approach to the “innovative capacity” notion. Thus, the resourceful approach to its definition is the most widespread approach [1-3]. It reflects opportunities of the innovation activity development and defines the strategy of innovational development – S. I. Dvoretskiy et al. [4], Monastyrny [5], Fathutdinov [6], et al. There is no unified classification of types and kinds of innovative capacity. The classification suggested by Antonenko [7] is of great interest. He marks the market type of innovative capacity as the highest level. The differences of forms in this capacity determine the existence of two subtypes: saleable, non-saleable; and in their turn subtypes are divided into classes, subclasses, kinds and sub-kinds.

To a definite degree, the complex definition of the essence and content of innovative capacity makes it difficult to form tools related to developing efficient methodology to estimate innovative capacity, and as a result it affects the final result of the economic entity’s innovative capacity.

Consequently, defining the essence of innovative capacity is a necessary element of forming the methodological base of its estimation. The methodological aspect of the problem also lies in the lack of comprehensive researches, methodological developments, and conceptual approaches to the estimation of the innovative capacity and efficiency of its use. They do not accurately show the formed categorial apparatus of the category under research [8]. So, in the Russian and international practice of innovations, innovative capacity is defined on the basis of single, structural indicators of the expert, point and integral estimation according to the methodology of rating agencies. The majority of them have a segmental character. Due to this, it is important to offer a relevant methodology of its estimation under contemporary conditions of development that corresponds to the “innovative capacity” essence. It says about the urgency of the research.

The aim of the research is to form a methodological approach to estimating “innovative capacity”. The tasks of the research are as follows: to form the theoretical and methodological standpoint, to characterize the notion “innovative capacity” and offer the authors’ opinion on this issue; to study and classify types and kinds of innovative capacity; to analyze methodologies of estimating capacity and form the methodological approach to its estimation; and to test it in the practical activity of commercial organizations. Theoretical and methodological basis of the research includes works of national and foreign economist researches, the Oslo Manual on issues related to the essence, content and measuring innovative capacity. The methodological basis of the research includes logical, scientific approaches to studying the essence, content and estimation of “innovative capacity”. Using such methods as analysis, synthesis, specification and generalization, grouping, formalization, abstract and logical, analytical, comparison, economic and statistic, expert estimation, the coefficient analysis identified the essence of the “innovative potential” notion. The authors’ position as for classifying its types and kinds was explained. Methodological approach to its estimation was formed and tested. According to its results, basic directions of using its results were defined.

The working hypothesis is based on the conceptual provision related to the methodological approach to estimating innovative capacity that must take into account contemporary peculiarities of the economic entity’s functioning. It assumes specifying economic essence and content characteristics of innovative capacity; systematization of its types and sub-types; and forming and testing methodological approach to its estimation by defining the areas of its use. Theoretical value of the research is as follows: the notion “innovative capacity” was formed; the authors’ opinion as for the classification of its types, taking into account its role and peculiarities of the economic entity’s development, was reasoned; and the preferential approach to estimating innovative capacity of commercial organizations under current conditions was explained and implemented.

Practical importance of the research lies in the development and application of the specific approach to estimating innovative capacity, practical recommendations that create methodological and practical basis for forming a subjective estimate of innovative capacity and define areas of its use (development and implementation of concepts, strategies, policy of the innovational area, modernization of its management, revealing factors, unused reserves, development tendencies, and opportunities of the innovative capacity growth, etc.).

LITERATURE REVIEW

Researching Notion “Innovative Capacity”

According to Atoyan, Zhits [9], innovative capacity conceptually reflects the phenomena of innovation activity. According to the Oslo Manual [10], this notion is important for clustering organizations and braches of developing countries.

The research shows (Table 1) that all approaches to defining it can be systemized as follows: resource-based approach in various modifications, approach that reflects opportunities of innovation activity development and defines the strategy of innovational development; approach that identifies innovative capacity with scientific and technical, technological capacity; approach based on correlation of innovation capacity with a specific level; and the one that combines the methodology of estimating innovative capacity. We think that in order to achieve the research goal, innovative capacity is a set of resourceful opportunities of the organization related to the performance of its innovation activity. These opportunities are defined through a number of innovation-oriented indicators on the macro and meso, and micro levels in compliance with the target innovational orientation.

Classification of Types of Innovative Capacity

The complexity of the “innovative capacity” category makes it difficult to form a unified accurate independent classification of its types. Suslov [11] characterizes the latter as large fragments that create various sorts of prerequisites for performing innovation activity. Table 2 shows the generalized classification of innovative capacity.

In our opinion, taking into account the role and peculiarities of the development, every economic entity can use its own classification of innovative capacity that corresponds to its actual state and defined tasks.

METHODS

Studying Methodological Approaches to Estimating Innovative Capacity

Sometimes economic literature identifies “estimation”, “measuring” of innovative capacity. It is generally accepted that measuring is a combination of operations to define the relation of one (measured) value to another homogeneous value accepted as a unit and kept in the technical means of measuring. The received value is a numeric expression of the measured value. Together with the indication of the used unit, it is called a value of the physical expression. Estimation is a way to define the essentiality of something for the acting and cognizing subject.

The Oslo Manual [10] acknowledges only measuring innovation capacity. It stipulates a number of difficulties that are caused by measuring knowledge that is not classified by people or concentrated in organizational procedures as well as receiving reliable data from organizations about exchanging knowledge with other organizations.

Taking into account the way how the key task related to estimating innovative capacity is defined, we think it is reasonable to single out the following approaches to its estimation (Table 3).

Thus, according to Nurgalieva [29], one of the tasks of the estimation is to single out the innovative constituent for every component of the total capacity of the organization estimated by stages: 1) defining singular indicators, questioning, expert estimation, 2) estimation of singular indicators by points, 3) calculation of structural indicators, and 4) defining the integral indicator of innovative capacity. Somenkova [17] estimates the capability of the organization to implement innovations on the basis of the estimation of its innovative capacity by points that includes defining its structural constituents.

The practical importance of estimation by points is limited by the lack of indicators measured on the quantitative basis. It stipulates the necessity to introduce a complex of calculation indicators that excludes subjectivity of expert estimates. So, based on the innovational cycle model, Shliahto [23] relates the results of scientific and scientific and technical activity to possible innovations. The more scientific and technical developments in their total number are practically used, the more efficiently the innovative (scientific and technical) capacity of the economic entity is applied. It is charatcerized by the following indicators: medium time duration of creating a new novelty, efficiency of novelties assimilation, and medium time duration of assimilating one novelty.

Yashin et al. [30] recommend integral estimation of organizations development for the specific period of time on the basis of combining methods of the estimation by points and multi-criteria vector optimization. The latter includes 5 integral groups of indicators that characterize the following: 1) financial and economic state of the organization, 2) state of the innovation-oriented financial constituent, 3) internal resourceful opportunities, 4) internal economic efficiency of the innovation activity, 5) perspective and efficiency of the innovation activity, and 6) stability of innovational development. The essence of the estimate by points comes down to assigning a specific number of points to every indicator by expertise. If the indicator differs from its optimal value, it is assigned a smaller number of points, and the general estimate of the innovational development level is characterized by a summarized number of points. The contribution of indicators in the generalizing integral indicator of the innovational development soundness is defined on the basis of the multi-criteria vector optimization that includes special mathematical methods, ways and tools.

The level of the innovative capacity of the country (region) is estimated by international organizations on the basis of the individual complex of indicators. This is a global index of innovations that consists of 81 separate variables of two groups (1) creativity of countries’ population in the Internet, (2) ecological soundness that describe in detail the innovational development of the world countries that have different levels of economic development. It is defined as a weighted total of estimates of two groups of indicators: 1) the current resources and conditions for implementing innovations (institutes, human capital and researches, infrastructure, development of the internal market, business), 2) practical results received from implementing innovations (development of technologies and economy, knowledge, results of the creative activity), i.e., as a correlation of expenses and effect. The methodology of the “Expert” rating agency regards the innovations capacity of the region as a constituent of the investment capacity that finally cannot reflect the whole innovational development.

In our opinion, the key peculiarity of all methods related to estimating innovative capacity is the availability of the “basic level” of indicators. According to the goal of the estimation, the qualitative indicator of the actual value will be defined against this level. Since the change of “the basic level” of indicators stipulates the change of the actual value, its setting must be stipulated.

Estimating Innovative Capacity of Russia on the Macro Level

Global index of innovations (GII) estimates the world innovational practice, measures and increases the efficiency of innovations. It is used for sustainable development of ways to estimate innovations from the complexity standpoint. If to compare it in view of countries of the world (Table 4), in 2014 Russia takes place 49.

Among the BRICS countries (Russia, Brazil, India, China, South Africa) Russia takes the 2nd place after China (place 29). The rating of the latter is compared to the rating of separate countries with a high level of profit. Among the countries of the former USSR, Russia takes place 5 and follows Estonia (position 24), Latvia (place 34), Lithuania (place 39) and Moldova (place 43). The factor that contributes to innovations when defining GII is human capital; the GII of Russia includes the following components: rating according to profit – 42, regional rating – 30, rating according to the efficiency coefficient – 49; herewith, the value of the global index of innovations is 39.1%.

12 dynamically developing countries are acknowledged as new innovators of the world (countries whose indicators advance the indicators of other countries in their group by 10% according to the level of profits). They include Moldova, China, Mongolia, Vietnam, India, Jordan, Armenia, Senegal, Malaysia, Thailand, Ukraine and Georgia.

In Russia like in many foreign countries, there is no unified methodology to estimate innovative capacity in all possible areas of innovation activity. Commercial structures are of specific interest. It stipulates the next stage of our research.

Implementing Methodology Related to Estimating Innovative Capacity on the Basis of Determining Financial and Innovational Soundness of Organization

Innovative capacity generates a high level of innovation activity. It also reflects the maximum opportunities of the commercial structure to define the depth of innovative transformations, and herewith efficiently creates new and future technologies.

Russian corporate organizations (Annex ÃÂ, Table ÃÂ. 1) were selected as objects of the research.

It is necessary to note that in spite of the fact that the federal statistical tools related to observing the innovation activity – form 4 “Information about Innovation Activity of Organization” innovation - ÃÂre constantly reconsidered by the Center of Statistics and Monitoring of Science and Innovations according to the modernized international standards, they exclude the issues related to identifying the innovative capacity.

We think that under contemporary conditions, taking into account the indefiniteness of the environment where organizations function when estimating innovative capacity, it is important to estimate the probability of performing their own innovation activity by them, and to estimate the need in resources for the current and strategic production of innovations (simultaneous financial and economic provision of the issue of the recently developed innovations or the existing products and forming new ones). It stipulates the preferability of the approach based on estimation of the financial and innovational soundness of the organization.

Annex B, Tables B. 1, B. 2 characterize types of financial and innovational soundness of commercial organizations and define it in the organizations under research. In JSC "SevKavNIPIgaz" the positive balance of own sources to provide operational process and implement innovations increased from RUB 47,125 thous. in 2009 to RUB 165,755 thous. in 2014. The relevant indicator according to major sources increased from RUB 47,125 thous. to RUB 202,580 thous. As a result, during the retrospective period high innovative capacity along with absolute financial soundness is observed. In 2009-2014 in OJSC “Velan” and CJSC “CSoft Rostov-on-Don” negative balance according to all sources related to providing operational process and implementing innovations says about negative innovative capacity along with the crisis financial state of the organizations. In 2009-2010 in “Anda Technology” LLC normal financial soundness and zero innovative capacity are observed, in 2011-2014 crisis financial state and zero capacity are observed.

The state of innovative capacity stipulates the development of areas of the strategy related to changes – improvements and/or innovations (innovational strategies). If the organization is interested most of all in innovational strategies, the estimation of innovative capacity is the most important goal when planning innovational inspections of the organization. Under the current conditions the risk-oriented strategies of innovations are of great importance.

RESULTS AND DISCUSSION

Theoretic Area of the Research

The notion innovative capacity is interpreted as a set of resourceful opportunities of the organization on performing its innovation activity defined through a number of innovation-oriented indicators on the macro, meso and micro levels according to the target innovational setting. From the practical standpoint, the suggested definition will allow to logically form the methodology of estimating innovative capacity, ideas about the classification and characteristics of types and kinds of innovative capacity are generalized and developed; it was reasoned that taking into account the role and peculiarities of the development every economic entity can use its own classification of innovative capacity that corresponds to its actual state and defined tasks.

Analytical Area of the Research

Innovative capacity of Russia was estimated on the basis of the calculation of the global index of innovations in terms of the world development, the BRICS countries, and the countries of the former USSR; human capital is the factor that contributes to innovations when defining the global index of innovations; the indicator in Russia is 39.1%.

Methodological Area of the Research

Methodological approaches to estimating innovative capacity are systemized into the following groups: detailed, diagnostic, the one based on estimating financial and innovational soundness of the organization, approach based on separate methods, ways, types, kinds and tools that must be selected taking into account setting the key task of the innovative capacity estimation, approach based on estimating financial and innovational soundness of the organization was methodologically reasoned and implemented; it focuses on estimating both their own innovation activity (high, zero innovative capacity in the organizations under research) and the need in sources for the current and strategic production (absolute financial soundness in JSC "SevKavNIPIgaz" and crisis financial state in OJSC “Velan”, CJSC “CSoft Rostov-on-Don”, and “Anda Technology” LLC). Table 5 shows the results of estimating innovative capacity.

The practical importance of the methodology lies in the fact that it estimates 1) innovative capacity of the organization according to the resultative provision of the current and created technologies, their implementation in the area of realization, and as a result revealing economic conditions of the innovations realizability in organizations and their impact of the development efficiency; 2) financial and economic soundness of the legal entity to the innovational development in terms of adequate financial state of the organization; as a whole it allows to estimate the efficiency of innovations and thereby to choose the implementation of a project.

We think that the received results can be used on the macro, meso and micro levels in the following areas (Table 6).

CONCLUSION

Thus, the performed research can be developed according to the following issues:

• Forming contemporary methodological tools for the estimation of innovative capacity [31,32]

• Developing the unified national methodology of estimating innovative capacity in all possible areas of the innovation activity especially in joint stock companies that create the opportunity of investment in the form of a scientific idea, new technical solution, invention;

• Considering the possibility to include the estimation of innovative capacity in the federal statistic tools to observe innovation activity on the state level;

• Developing innovational strategies that take into account risk-oriented character of the activity of innovative organizations;

•Taking into account peculiarities and environment of the organization functioning, implementing other approaches to the estimation of innovative capacity of the economic entity.

Tables at a glance


Table 1	Table 2	Table 3


Table 4	Table 5	Table 6

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